The 10 Most Common Lease Compliance Issues You’ll Encounter

by | BiggerPockets.com

A lease compliance issue is just that—when the tenant doesn’t comply with the rules outlined in their lease. As you’ll see, most non-compliance issues can be dealt with first by contacting the tenant, and if the tenant does not remedy the problem within a reasonable amount of time, it should be followed up with a written notice demanding their compliance.

In Washington State, the law states that after receiving written notice to comply with their rental agreement or lease, tenants have ten days to remedy the problem or they can be evicted. Make sure you know your own local law in regard to lease compliance before proceeding. If they are responsible, your tenant will hopefully take care of the issue after a simple phone call, email, or letter. If more force is required, send them a notice. Usually, a notice stating that they must comply within “X” number of days (whatever your local laws require) or be forced to vacate the premises is enough to generate their compliance. Now, let’s get to the list of the ten most common lease-compliance issues.

The 10 Most Common Lease Compliance Issues You’ll Encounter

1. Junk Outside

Nothing screams “slum” like piles of junk cascading over the balcony, down the driveway, and pouring out the front door of your rental unit. While we are sure YOU would never live this way, there is a good chance your tenant will have no problem with that lifestyle. Piles of junk drive away other tenants in a multifamily situation, encourage similar behavior from neighbors, and can permanently damage your house by inviting rodents, bugs, and mold to move in.

The first step in dealing with excess junk is to make sure your lease includes specific language requiring that garbage may not be piled up and it must be placed in proper receptacles. Furthermore, your lease should state what items are appropriate to be kept outside. This is a bit easier to enforce in a multifamily situation, but even single family homes should have a standard as to what is and is not allowed. Our current lease states the following: “Outside areas must remain clear of debris, garbage, bicycles, toys, furniture, tarps, and other clutter. Do not use your balcony as storage or to dry clothes. Decks/balconies are meant for your enjoyment: A barbecue, lawn furniture and small plants are the only acceptable items. Failure to abide by this policy will result in termination of your tenancy.”

When we notice a tenant has junk or garbage piling up (usually on a deck, patio, or front porch), we will either call or send a letter, depending on the relationship we have with the tenant. Sometimes a phone call is enough to elicit the needed action, and other times a letter (or better yet, a certified letter) is required to get the tenant to take the appropriate measures. This letter should have a deadline for getting their trash removed, based on the legal number of days to correct a lease violation as outlined by your state’s landlord-tenant laws.

2. Unapproved Roommates

Tenants often move in or move out individuals without notifying the landlord. We take this very seriously, as we need to always have a clear understanding of who is and isn’t living on the property. It’s important to require that each adult individual living in the property be screened properly, ensuring they meet your minimum qualifications and that they be listed on the lease. You might really like that tenant Betty, but when she moves in her new boyfriend Barney, how do you know he is not an ex-con who just finished serving 18 years for the murder of his cousin? Also, if Betty moved out, leaving you with Barney as your sole tenant, you need to be sure that 1) he meets your qualification standards, and 2) he is legally bound by the terms in your contract.

If you believe your tenant has moved someone into the unit, the first step we take is to place a phone call to the tenant. Nine times out of 10, the tenant will quickly say, “Oh, they are just staying with me for a little while,” to which we respond, “Well, your lease, as well as our company policy, only allows guests to stay for up to two weeks before they must be added to the lease. Has your guest been with you that long?” After some fumbling around, the tenant will finally admit that the person is moving in, and they will usually ask, “So, how do I add them to the lease?”

Technically speaking, if the tenant is in a lease and their term is not up, the tenant does not have the right to move someone in. However, they’ll likely do it anyway, so we find it best to allow the new guest to apply to become a tenant. The process for allowing a tenant to add someone to the lease is fairly similar to the process of renting it out in the first place:

  1. Give the new “tenant” an application to fill out and require that they fill it out in full and include the application fee.
  2. Complete the full screening process, including the background check, credit check, landlord references, and income verification (though if the tenant living there already meets the income requirement, technically the new tenant will not need any income, as the income requirement is based on total household income).
  3. If you approve the new tenant, you have a couple options as far as getting them on the lease: 1) Sign a new lease with all the tenants. Walk both the original tenant(s) and the new tenant through the entire lease, just as you did with the original tenant when they moved in. Then, make sure all adults sign the new lease. Or, 2) Walk all tenants through the old lease then have them sign a new addendum to change the terms of the old lease, which in this situation would be adding “so-and-so” to the lease. Be sure to spell out exactly what the change in terms are and state that all other terms and conditions will remain the same and in full force.

In the event the tenant’s guest does not meet your minimum screening standards, you will need to immediately give the tenant an ultimatum: Either the guest vacates, or everyone does. This situation can be dealt with the same as any other non-lease compliance situation, by giving the tenant a legal written notice to comply with their lease or face eviction. The tenant will then be legally required to comply within the number of days outlined by your state’s landlord-tenant laws, and if they choose not to, you can evict them and start over with a new tenant. We have never had it come to that, though; most tenants in this situation aren’t going to willingly lose their home over a roommate.

3. Smoking

If you suspect a tenant is smoking in their unit (usually from cigarette butts around their property or by the smell when you have an inspection done), provide them with the notice to comply letter immediately. Smoking can cause thousands of dollars in damage to your property, so deal with the situation immediately. Most of the time, the tenant is going to lie and say, “I wasn’t smoking!” or they will blame it on a friend or guest. Send the letter anyway (they are responsible for the actions of their friends and guests as well), and then call the tenant and make sure they received the letter and they understand the seriousness of the situation. Let them know you are scheduling someone to check out the property and ensure that the problem has been fixed.

If after the inspection there is still evidence of smoking in the unit, you have the decision to either get rid of the tenant, or simply let it go and hold the tenant liable for the damages when they eventually move out or when their lease ends (be that month-to-month or further down the road). Let’s be honest, the cost of an eviction and the turnover might be just as much, if not more, than the damage from the smoke smell. Once the damage is already done, it’s up to you to decide how hard you want to push. Just remember, cigarette smoke permeates everything—so the sooner you can take care of the situation, the better. Of course, the easiest way to avoid this problem altogether is by not approving anyone who smokes in the first place.

Related: Inherited Tenants: How I Dealt With an Occupant Paying $295/Mo With No Lease

We have one tenant who currently smokes in his unit and has since long before we took over. There is no point in forcing him to stop, as the carpet and paint are already ruined. If we were to evict him, we would still need to make all the repairs, but we would lose an otherwise good tenant. These are the “gray areas” of landlording and something you’ll likely encounter as well.

pets-in-rentals

4. Pets

Unapproved pets are another common lease compliance issue landlords face. For whatever reason, tenants think they can hide their 70-pound chocolate lab in their unit and the landlord will never notice. In a situation such as this, you have a couple options: Let them keep the animal and consider charging them a one-time fee or monthly rent for the privilege of keeping an animal on the premises (if you do this, make sure to add a Pet Addendum to their lease), or send the tenant a notice demanding their compliance with their lease, specifically removing the animal from the premises. In a multifamily situation, just remember that if you make an exception for one pet, other tenants will expect you to make an exception for theirs as well.

5. Bugs

Last year a family moved into one of our rentals, immigrating to the United States from another country halfway around the world. Then, several months ago, one more family member from that country came to live with them, which we allowed. Within a few weeks, the tenants began calling about a bug infestation in their property and blaming us for the problem, threatening to call the city, the state, the health department, the FBI, and anyone else because of our bug problem. Of course, we immediately sent out the best pest controller in our area, and indeed, there were bugs. However, he had never seen this kind of bug before and had no idea what they were. After taking them home to investigate, guess what he discovered! Yep, the bugs were found in only one part of the world: the home country of the family.

Bugs are frustrating because most of the time they are caused by your tenant, but the tenant will never believe that. They’ll complain and bad-mouth you to everyone until the problem is fixed. Even in the story above, the tenant still believes it is our fault for the bugs, but they got to foot the bill for the exterminator.

The truth about bugs is this: They are everywhere! Bugs live in nearly every square foot of your property, but they tend to come out into our world when there is food for them. When there is no food, they tend to disappear. Therefore, the first way to cure bug problems is to educate tenants on the best way to avoid them. A clean house is the best way to avoid bugs. That said, infestations do happen, and sometimes it is outside the fault of the tenant. This could be due to improperly sealed indoor spaces, ground infestations, wall infestations, neighbors, or other circumstances.

The good news is, most bug problems can be easily remediated by a professional pest inspection company. If the problem is minor, you might even be able to do it yourself with some chemicals bought at the hardware store, but in our experience, those only work some of the time, and it’s best to call the professionals.

Some landlords will include a clause in their lease stating that the home is bug-free at the time of move-in and any pests discovered in the home after so many days of occupancy (this can vary from a couple of weeks to a couple of months) are the tenant’s responsible to remedy. It’s logical to assume that if the rental has no bugs before the tenant moves in, then bugs appear after the tenant has moved in, they are a result of the tenant. Our lease states that the tenant will be liable for all expenses associated with the extermination and fumigation for infestations that are a result of the tenant. Of course, before implementing any changes to your lease, be sure it is legally allowed by your state-specific landlord-tenant laws.

6. Mold

Mold is everywhere, especially if you live in a wet climate; there is simply no way to escape it. Mold spores drift through the air and settle on the couch, on your face, on the floor, everywhere! The problem, however, is when mold spores are given an environment where they thrive and begin to grow on surfaces. This is when the dreaded “black mold” shows up, something that strikes more fear into the hearts of tenants than anthrax or Ebola. The truth is, black mold is just a naturally occurring fungus that, when highly concentrated, can cause allergic reactions for those with weak immune systems.

That said, if your tenant sees a small amount of mold on their bathroom wall, you can bet they’ll be calling you telling you about their leg pain, their headaches, their sleepless nights, and their hepatitis—all caused, of course, by that dreaded “black mold.”

All joking aside, the presence of visible mold is a serious issue landlords need to deal with swiftly. As stated by NOLO.com, “across the country, tenants have won multimillion-dollar cases against landlords for significant health problems—such as rashes, chronic fatigue, nausea, cognitive losses, hemorrhaging, and asthma—allegedly caused by exposure to ‘toxic molds’ in their building.”

Some states, like Washington and California, actually have laws that require certain disclosures be given to all tenants when they sign a new lease. Besides the health concerns for those with weak immune systems and hypochondriacs, mold will also cause significant damage if left untreated (and many times, because of the stigma behind mold, tenant’s won’t go near it with a ten foot pole, even when it’s an easy fix). Therefore, mold IS your problem, whether or not it is caused by the tenant or your building. If it’s caused by your tenant and they fail to remedy the problem, deal with it swiftly, hold your tenant responsible for the damages, then educate your tenant on how to prevent future occurrences.

Mold tends to grow where there is poor airflow and moisture. This is why bathrooms are the worst culprits for mold, usually due to the lack of a window and the continuous steam from hot showers. Mold also can grow easily behind furniture that is pushed too close to a wall, if there is a heavy level of moisture in the room air. Notice that in both of these cases, the mold is NOT a disease, mischievously planted by the landlord, despite what tenants might think. Mold is commonly caused by the tenant, but as the quote above by NOLO shows, this doesn’t mean it’s not your responsibility to deal with it.

Step one in dealing with mold is making sure you and your tenant are properly educated on what causes mold and how to clean it. We would recommend printing out the PDF produced by the United States EPA titled, “A Brief Guide to Mold, Moisture, and Your Home,” which you can download for free at http://www.epa.gov/mold/pdfs/moldguide.pdf.

Make sure your tenant gets a copy of this document when they move into their unit. Also, explain to the tenant that mold is most commonly caused by three things:

  1. Steamy showers
  2. Furniture against walls
  3. Leaky pipes, ceilings, faucets, etc.

Explain to them that numbers one and two are their responsibility, and number three is yours IF they report issues. If they don’t report a leak that results in mold growth, this falls under the category of avoidable damage, most likely making them liable for the expense of the remediation. Encourage your tenant to run the bathroom fan at least one hour after every bath or shower and run their kitchen fan while cooking. This is probably the number one reason why tenants have mold; if they do not use proper ventilation during these activities, all that warm, moist air will settle throughout the house, creating a prime environment for mold and mildew. If the tenant’s bathroom or kitchen does not have a vent, install one. Be sure they understand the need to properly ventilate their home by opening windows and airing it out on nice days, make sure they keep their couches, their beds, and their clothes away from walls, and they don’t cram items into corners or against walls in non-ventilated areas (such as closets, cabinets, or attics). And of course, be sure leaks are fixed immediately.

Related: 38 Addendums Every Landlord Needs for a Battle-Ready Lease

According to the EPA, mold that covers less than 10 square feet (an area about three feet by three feet) can be easily cleaned up by a non-professional. Therefore, if the mold already exists in small amounts (on windowsills, behind a bed, on the shower tile), the following five-step process, as given by the EPA, should take care of the problem:

  1. Act Quickly: The faster you deal with mold, the less damage it can cause.
  2. Fix the Cause: If the cause is a leak, get that fixed as soon as possible. If the cause is heavy moisture, encourage the tenant to open windows more often or run their fan(s) more often. Also make sure the tenant’s furniture is moved away from the walls.
  3. Clean It: Scrub mold off hard surfaces with detergent and water, and dry completely. Be sure to wear gloves, goggles, and possibly a respirator if you are concerned about breathing in spores.
  4. Toss Porous Stuff: Porous materials, like ceiling tiles or carpet, may need to be thrown away if they are moldy.
  5. Paint: Never paint over mold (it’ll just grow over the new paint), BUT after it is cleaned and dry, you may paint it if desired.

Remember, mold is not a disease or a chemical that is likely going to kill you or your tenants. However, it is a serious enough issue that you need to understand how to deal with it to keep your tenants safe and happy, and to prevent damage to your property. It’s also important to understand mold and mildew so you don’t get stuck footing the bill for tenants whose living conditions are the result of the problem.

7. Housekeeping

It’s not your job as the landlord to be the tenant’s mother and insist that they clean their room, but it is your job to ensure your investment is not being destroyed or being introduced to mold, pests, or rodents because someone chooses to live like an animal. Periodic inspections can let you know how your tenant lives, and if a major problem is found, you can give the tenant a Notice of Compliance to tidy up. If they don’t, either evict them over non-compliance or wait until their lease ends and don’t renew it.

hoarder_house_tenant_abuse

8. Noise

If you own a multifamily property, chances are you will have to deal with noise complaints. We once had a tenant who would complain because she could hear her neighbor singing in the shower every morning at 5:00 a.m. These situations do happen often when people live in close proximity, and as the landlord, you’ll be the first one they call. When we get noise complaints, typically this is the three step process we follow:

  1. Thank the tenant for letting us know about the issue and encourage them to deal with it themselves. Many times, the tenant is just nervous to talk to the other tenant, but with some encouragement from the landlord, they will usually approach the situation with the other tenant without having to involve the landlord directly.
  2. If #1 doesn’t work, we simply call the tenant making the noise and explain the problem and ask them to keep more quiet.
  3. If #2 doesn’t work, we send a formal Notice to Comply letter to ask them to stop.

If that doesn’t work, it might be time to either pursue eviction or wait for their lease to end and not renew it, depending on the situation. Sometimes there is nothing you should do, and the tenant being bothered simply needs to suck it up. For example, if you have a multifamily property and the upstairs tenants have children who continually walk around on the floor, bothering the tenant below, what can you do? You can’t tell the upstairs tenant to tie their children up, and asking them to leave because of their kids would violate Fair Housing Laws. People will always complain, and it’s your job to decide if the complaint is warranted and worth trying to solve.

When dealing with multifamily units, it’s natural to have some tenants who just don’t get along with one another, creating other conflicts. As long as these conflicts are normal, they can be handled the same way a noise complaint would be handled:

  1. Encourage them to work it out amongst themselves,
  2. Contact the offending tenant and ask them to correct the issue, then
  3. Send a Notice to Comply.

However, if the conflict is of a dangerous or criminal nature (such as getting into physical fights or threatening each other), it would be best to simply get rid of those tenants. Ain’t nobody got time for that.

9. Window Coverings

One of our biggest pet peeves as property owners is driving up to our apartment complex, with the beautiful lawn, pristine paint job, and impeccable landscaping, only to see bed sheets hanging in the windows of the units.

Tenants often choose not to “invest” in curtains (why would they, when bed sheets do the trick?) and instead put up bed sheets to block out the light.

To combat this, we install inexpensive white mini-blinds in every single property we own (the kind that can be purchased from any big-box home store for $5–$20) and install them before a tenant moves in. However, even this only solves half the problem, as those blinds are commonly damaged by irresponsible tenants, children and pets. Even so, we require that all blinds be in good operating order, and if any are damaged, the tenant is responsible for either installing new ones, or we will install new ones for them, billing them for the cost. After getting a $50 bill for new blinds (materials and labor) a few times, they find a way to keep them intact.

10. Breaking the Lease

Finally, let’s talk about what happens when a tenant wants to break a lease. Perhaps they got a new job elsewhere, they broke up with their significant other, or they simply found a better place to live and want out. The purpose of a lease is to stop this kind of thing from happening, but tenants tend not to care about the lease as much as the landlord and they’ll break the lease anyway. So what then?

First, we tell tenant that they are legally required to continue paying the rent up until the end of their lease. Oftentimes, it just never clicked with them how a lease really worked (or never thought we’d care), and this revelation is enough to keep them in place. Other times, however, they simply move. When the tenant leaves, this can leave you scrambling to find a new tenant, but hopefully you have a hefty security deposit to help cover some of the unexpected financial loss.

Be sure to check with the laws in your state on what you can and can’t do with their deposit, but chances are you can use this to cover the lost rent for the property. Just like with any unit whose tenant has vacated, keep detailed records of the condition of the rental and the cost associated with making it rent-ready again. Then, add in the utility bills, lost rent, and any other charges that are the tenant’s responsibility during the remainder of their lease and hold them to it. If the deposit doesn’t cover it, be sure to send them the bill, and if necessary, contact your attorney for help with trying to collect the balance.

One tactic that has worked well when a tenant wants to break their lease with us is this: We tell them that they need to keep paying rent, but the day that we get their unit re-rented out is the day we’ll let them out of their lease and refund any portion not used. For example, let’s say that Tenant John broke his lease and left his apartment on the 31st of March, but he’s responsible for April rent and agrees to pay it on the 1st. You immediately get the unit turned over and get the unit re-rented to Linda on the 9th of April. Because Tenant John had paid for the month of April at the beginning of that month and Linda moved in and paid rent on the 9th, you only lost eight days’ worth of rent (from April 1st through April 8th), so that’s all you charge Tenant John, refunding him back the difference. In this case, April had 30 days, and eight of those were Tenant John’s responsibility, or 26.66 percent of the month. If Tenant John’s rent was $600 per month, then John would be responsible for $160, but because he paid $600 on the 1st, he would receive a rent refund of $440, along with his deposit refund. Tenant Linda would cover the rest of the month, and we would have no lost rent from that broken lease.

Sometimes, of course, Tenant John will refuse to pay for the next month’s rent, though he is still liable for it. Either way, as long as we get the unit re-rented fairly quickly and the unit does not require an expensive turnover, we won’t lose any money on the broken lease, which is good for me and good for the tenant who vacated.

[This article is an excerpt from Brandon Turner’s The Book on Managing Rental Properties.]

Anything you’d add to this list? Which of the above issues have you had to deal with?

Let me know your experiences with a comment!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

4 Comments

  1. Great Article: We own a 55 plus adult complex ourselves and our rules are pretty much the same. The problem with bugs caught our eye. Even though we put sidewalks completely around the duplex unit to keep plans and dirt away from the stem walls- insects as you say HAPPEN. We were considering how to address this in our rental agreement- we do sanitize and spray insect defogger before each new tenant arrives- but during certain times of the year this can be a problem. Most of our Seniors have common sense and keep the counters clean and spray themselves- but there is always the whiner who thinks we should wipe their fannies. We give them a can of dairy defogger which works extremely well for most insects- Dairy farmers use it to keep flies from laying eggs on such things as cow utters-ect. You can get it at most farm supply companies and it does actually work amazingly well. One product is called farm and diary CV -80D. ( Country VET ). Yes we also loved the part about junk- We have yard maint- supply ea week- so we have policy that states that our tenants can pretty much do whatever they want behind their yard gates ( which are 6 foot wood fences and gate- ) but nothing out front except their car. We found this keeps our complex looking wonderful. Great Blog- Thanks

  2. dave lacroix on

    nice article…….covers most of the issues we have faced- sometimes we have a tenant that has been in a unit soooo long that to evict would be stupid, like you said- the carpets ruined, the place needs paint- why boot a 500 month guy who pays on time every month….your looking at 1500-2500 to refurb completely a unit then your waiting for the next tenant and hopefully get someone who is on time- cost vs return…..very very good article.

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